This week focuses on US CPI and PPI: May CPI year-on-year is expected to rise to 4.2%, and core CPI year-on-year is projected at 2.9%.

⑴ A dense release of U.S. economic data is scheduled for this week. On Monday, the May Employment Trends Index and the first quarter industry and retail financial reports will be published. On Tuesday, key focus will be on the international trade deficit for April, which is expected to narrow from $60.31 billion to $56 billion. Existing home sales in May are projected to rise slightly from 4.02 million to 4.05 million units.⑵ Wednesday will bring the most crucial inflation data of the week: May CPI month-on-month is expected to increase by 0.5% (previous value 0.6%); core CPI month-on-month is expected to rise by 0.3% (previous value 0.4%); CPI year-on-year is predicted to go up from 3.8% to 4.2%, and core CPI year-on-year is forecasted to increase from 2.8% to 2.9%. The EIA weekly oil inventory report and the Treasury Department’s monthly statement will also be released on the same day.⑶ On Thursday, initial jobless claims will be published, expected to decrease from 225,000 to 220,000. May PPI month-on-month is forecasted to rise by 0.6% (previous value 1.4%), and core PPI month-on-month is expected to grow by 0.4% (previous value 1%). On Friday, the preliminary University of Michigan Consumer Sentiment Index for June will be released, expected to drop from 48.2 to 45.5. From a trading psychology perspective, if the CPI data rises above expectations, it will further reinforce market bets on Federal Reserve rate hikes and may trigger declines in both stocks and bonds; if the data is moderate, it could ease the recent tightening panic caused by employment data. Going forward, attention will be paid to the transmission of energy prices caused by the situation in the Middle East and the evolution of market expectations ahead of next week's FOMC meeting.